(a) under section 264 of the 1986 Act (or Article 238 of the 1989 Order) for a bankruptcy order to be made against an individual; or

(b) under section 5 of the 1985 Act for the sequestration of the estate of an individual.

(2) But such a petition may be presented only on the ground that-

(a) the individual appears to be unable to pay a regulated activity debt; or

(b) the individual appears to have no reasonable prospect of being able to pay a regulated activity debt.

(3) An individual appears to be unable to pay a regulated activity debt if he is in default on an obligation to pay a sum due and payable under an agreement.

(4) An individual appears to have no reasonable prospect of being able to pay a regulated activity debt if-

(a) the Authority has served on him a demand requiring him to establish to the satisfaction of the Authority that there is a reasonable prospect that he will be able to pay a sum payable under an agreement when it falls due;

(b) at least three weeks have elapsed since the demand was served; and

(c) the demand has been neither complied with nor set aside in accordance with rules or, in relation to Scotland, with prescribed provisions.

(5) "Individual" means an individual-

(a) who is, or has been, an authorised person; or

(b) who is carrying on, or has carried on, a regulated activity in contravention of the general prohibition.

(6) "Agreement" means an agreement the making or performance of which constitutes or is part of a regulated activity carried on by the individual concerned.

(7) "Rules" means rules made under section 412 of the 1986 Act (or Article 359 of the 1989 Order).

Insolvency practitioner's duty to report to Authority.

323. - (1) If-

(a) a bankruptcy order or sequestration award is in force in relation to an individual by virtue of a petition presented by a person other than the Authority, and

(b) it appears to the insolvency practitioner that the individual is carrying on, or has carried on, a regulated activity in contravention of the general prohibition,

the insolvency practitioner must report the matter to the Authority without delay.

(2) "Bankruptcy order" means a bankruptcy order under Part IX of the 1986 Act (or Part IX of the 1989 Order).

(3) "Sequestration award" means an award of sequestration under section 12 of the 1985 Act.

Authority's powers to participate in proceedings.

324. - (1) This section applies if a person other than the Authority presents a petition to the court-

(a) under section 264 of the 1986 Act (or Article 238 of the 1989 Order) for a bankruptcy order to be made against an individual; or

(b) under section 5 of the 1985 Act for the sequestration of the estate of an individual.

(2) The Authority is entitled to be heard-

(a) at the hearing of the petition; and

(b) at any other hearing in relation to the individual under-

(i) Part IX of the 1986 Act;

(ii) Part IX of the 1989 Order; or

(iii) the 1985 Act.

(3) A copy of the report prepared under section 274 of the 1986 Act (or Article 248 of the 1989 Order) must also be sent to the Authority.

(4) A person appointed for the purpose by the Authority is entitled-

(a) to attend any meeting of creditors of the individual;

(b) to attend any meeting of a committee established under section 301 of the 1986 Act (or Article 274 of the 1989 Order);

(c) to attend any meeting of commissioners held under paragraph 17 or 18 of Schedule 6 to the 1985 Act; and

(d) to make representations as to any matter for decision at such a meeting.

(5) "Individual" means an individual who-

(a) is, or has been, an authorised person; or

(b) is carrying on, or has carried on, a regulated activity in contravention of the general prohibition.

Provisions against debt avoidance

Authority's right to apply for an order.

325. - (1) The Authority may apply for an order under section 423 of the 1986 Act (or Article 367 of the 1989 Order) in relation to a debtor if-

(a) at the time the transaction at an undervalue was entered into, the debtor was carrying on a regulated activity (whether or not in contravention of the general prohibition); and

(b) a victim of the transaction is or was party to an agreement entered into with the debtor, the making or performance of which constituted or was part of a regulated activity carried on by the debtor.

(2) An application made under this section is to be treated as made on behalf of every victim of the transaction to whom subsection (1)(b) applies.

(3) Expressions which are given a meaning in Part XVI of the 1986 Act (or Article 367, 368 or 369 of the 1989 Order) have the same meaning when used in this section.

Supplemental provisions concerning insurance companies

Continuation of long term business while in liquidation.

326. - (1) This section applies in relation to the winding up of an insurance company-

(a) to which Part II of the Insurance Companies Act 1982 ("the 1982 Act") applies; and

(b) which carries on long-term insurance business.

(2) Unless the court otherwise orders, the liquidator must carry on the long-term business of the company with a view to its being transferred as a going concern to another insurance company (whether an existing company or a company formed for that purpose).

(3) In carrying on the business, the liquidator-

(a) may agree to the variation of any contracts of insurance in existence when the winding up order is made; but

(b) must not effect any new contracts of insurance.

(4) If the liquidator is satisfied that the interests of the creditors in respect of liabilities of the company attributable to its long-term business require the appointment of a special manager of the business, he may apply to the court.

(5) On such an application, the court may appoint a special manager of the business to act during such time as the court may direct.

(6) The special manager is to have such powers, including any of the powers of a receiver or manager, as the court may direct.

(7) Section 177(5) of the 1986 Act (or Article 151(5) of the 1989 Order) applies to a special manager appointed under subsection (5) as it applies to a special manager appointed under section 177 of the 1986 Act (or Article 151 of the 1989 Order).

(8) If the court thinks fit, it may reduce the value of one or more of the contracts made by the company in the course of carrying on its long-term business.

(9) Any reduction is to be on such terms and subject to such conditions (if any) as the court thinks fit.

(10) The court may, on the application of an official, appoint an independent actuary to investigate the long-term business of the company and to report to the official-

(a) on the desirability or otherwise of that business being continued; and

(b) on any reduction in the contracts made in the course of carrying on that business that may be necessary for its successful continuation.

(11) "Official" means-

(a) the liquidator;

(b) a special manager appointed under subsection (5); or

(c) the Authority.

(12) The liquidator may make an application in the name of the company and on its behalf under Schedule 2C to the 1982 Act without obtaining the permission that would otherwise be required by section 167 of, and Schedule 4 to, the 1986 Act (or Article 142 of, and Schedule 2 to, the 1989 Order).

Reducing the value of contracts instead of winding up.

327. - (1) This section applies in relation to an insurance company which has been proved to be unable to pay its debts.

(2) If the court thinks fit, it may reduce the value of one or more of the company's contracts instead of making a winding up order.

(3) Any reduction is to be on such terms and subject to such conditions (if any) as the court thinks fit.

Treatment of assets on winding up.

328. - (1) The Treasury may by regulations provide for the treatment of the assets of an insurance company on its winding up.

(2) The regulations may, in particular, provide for-

(a) assets representing a particular type of business of the company to be available only for meeting liabilities attributable to that business;

(b) separate general meetings of the creditors to be held in respect of liabilities attributable to a particular type of business of the company.

Winding up rules.

329. - (1) Winding-up rules may include provision-

(a) for determining the amount of the liabilities of an insurance company to policy holders of any class or description for the purpose of proof in a winding up; and

(b) generally for carrying into effect the provisions of this Part with respect to the winding up of insurance companies.

(2) Winding-up rules may, in particular, make provision for all or any of the following matters-

(a) the identification of assets and liabilities;

(b) the apportionment, between assets of different classes or descriptions, of-

(i) the costs, charges and expenses of the winding up; and

(ii) any debts of the company of a specified class or description;

(c) the determination of the amount of liabilities of a specified description;

(d) the application of assets for meeting liabilities of a specified description;

(e) the application of assets representing any excess of a specified description.

(3) "Specified" means specified in winding up rules.

(4) "Winding-up rules" means rules made under section 411 of the 1986 Act (or Article 359 of the 1989 Order).

(5) Nothing in this section affects the power to make winding-up rules under the 1986 Act or the 1989 Order.